The Australian government has released a pre-election budget update, revealing massive revenue write-downs and deeper budget deficits.
It shows a $A33.3 billion revenue black hole over four years due to the impact of a substantial decrease in nominal GDP on expected tax receipts.
Forecast growth in real GDP has been lowered by a quarter of a percentage point for this financial year and next. Deeper budget deficits are expected for next three years, while unemployment is predicted to rise to 6.25%, representing a further 70,000 out of work
The federal government will recoup $A17.4 billion by way of cuts and tax hikes, including a levy on bank deposits and tax hike on cigarettes, the ABC reports.
A 0.05% levy on bank deposits up to $250,000 will be collected from 1 January 2016 and is aimed at protecting savings in the event of a banking crisis. The levy will be imposed on banks not account-holders and is forecast to raise $A733 million in its first 18 months.
The government had already announced a tax increase on cigarettes from December of 12.5% each year for four years, raising $A5.3 billion over the forward estimates.
The cost of managing asylum seekers has blown out by another $A350 million, which is being partly offset by $A236 million in cuts to Australian aid programmes.
The government blamed the revenue black hole on a number of factors, including lower wages growth and faster-than-expected falls in commodity prices.
Treasurer Chris Bowen said the budget update sets out the Government's economic plan that it will take in to the federal election campaign.
But the opposition has seized on the figures to bolster its argument that Labor cannot manage the economy. Opposition treasury spokesman Joe Hockey said Labor has lost control of the budget and is losing control of the economy.